Monday 13 December 2010

For now, the pupil premium is another broken Coalition promise

The pupil premium is a good idea, which has been sacrificed on the altar of austerity.

The Coalition Agreement makes a very clear commitment about how the pupil premium will be funded.

"we will fund a significant premium for disadvantaged pupils from outside the schools budget by reductions in spending elsewhere".

So has this promise been kept?

No. Instead, the 'premium' will be funded by redistributing money within a shrinking schools budget, so that most schools will see their funding cut.

A shared challenge for Labour, Liberal Democrat and Conservative supporters who believe the pupil premium principle is a good one should now be to identify how to fund it, as the Coalition promised, an issue we will develop in the next issue of the Fabian Review.

The deputy Prime Minister Nick Clegg did fight hard inside government for genuinely new money for the pupil premium. He even tried to settle the Whitehall battle by publicly declaring victory, stressing he had secured "additional" money when announcing the policy on the Friday before the spending review. 

"This is real new money from elsewhere in Whitehall, from outside the education budget. We are not just rearranging the furniture", a Downing Street spokesman told the Guardian.

But it wasn't, as Michael Gove acknowledged immediately after the spending review, in admitting the money would come from cutting some schools' budgets.

If you exclude the deep cuts of around 60 per cent in capital spending on schools, along with cuts to ’non-essential‘ activities such as sport and music, there is an increase in real terms of ’current‘ schools spending of 0.1 per cent a year - but only once the pupil 'premium' money is counted.

Rising pupil numbers easily outstrip this: when this is factored in, Luke Sibieta of the Institute of Fiscal Studies (IFS) calculates that the spending settlement means that average spending per pupil will in fact fall by 0.6 per cent a year, or 2.25 per cent in real terms over four years, even once the "premium" is counted in. (The premium cash softens this blow: spending per pupil would fall 10 per cent in real terms without it).

There are both policy and political problems in failing to resource the pupil premium as planned.

The question now becomes: which schools will have their funding cut?

As Michael Gove has said, we have to wait for the government to announce the detail of the policy to find out where the school cuts will now fall.

"whether or not we allow the pupil premium to go to slightly more children or we target it very narrowly on the very poorest... you can then make a calculation about which schools will find that they're actually losing funding, and which schools will find that they're gaining funding."

This risks turning a popular policy into a source of resentment, and there will be strong political cross-pressures which could undermine the whole principle of the premium further.

The worse outcome will be if the policy design were to lead to the perverse outcome that means the premium formula takes money away from the schools with most poor pupils and towards more affluent areas, as the government's preferred policy design would have done.

Fortunately, warnings about this from the Institute of Fiscal Studies, from London Councils and others seem to have had some effect. The government has at least delayed its plans to have a higher pupil premium for eligible pupils in more affluent areas (a suggestion made on the grounds that less well off pupils in these more affluent areas have been traditionally underfunded). Analysis suggests the government risked over-gearing its response. The IFS concluded that a flat rate premium - not worth more in affluent Wokingham than disadvantaged Tower Hamlets - would be "simpler and more consistent with the Government’s stated objectives" for the premium.

The point has apparently been conceded, for now. But the government may change its mind next year, reports The Guardian today.

The Clegg letter, received last week, says there is a case for giving higher levels of additional funding for deprived pupils in areas where the overall funding for schools is lower. A spokesman confirmed that this year the pupil premium would be a flat rate but in subsequent years it could be bigger for areas that have been traditionally underfunded.

Those "traditionally underfunded" areas are the more affluent areas, showing how the government's policy thinking risks pulling in opposite directions.

It wants to do more for poor pupils (because they need greater financial support to have equal chances with their peers) yet at the same time argues that the poorest areas and schools have got too great a share of resources under the current spending formulas.

Holding both thoughts in mind while redistributing within a shrinking budget will lead to unintended consequences.

This will also be reinforced by countervailing political pressure, as shown in The Telegraph's fear of funding being cut in better-off areas, were the premium principle to be used for a strong funding pitch to disadvantage (as indeed it should be). The Telegraph could be reassured somewhat if the government does indeed move away from a flat rate premium -
to address what government perceives as the overfunding of disadvantaged areas - but quite probably at a cost to the central purpose of the pupil premium policy.

That pressure will prove much harder to handle, politically, because the premium is no longer about choosing a progressive distribution of "additional" resources. Instead, a strong pupil premium agenda would now require most Conservative MPs to support real cuts in funding for schools in their constituencies. This probably isn't going to happen. And so, while the introduction of the premium is hailed, it won't be surprising if this has an impact on the policy choices made about the premium over time - as with the initial year one 'premium' being smaller than anticipated, at £625 million or £430 per pupil, or the idea of a higher premium for affluent areas being kept in play for future years.

So the pupil premium is a good idea which needs rescuing.

That depends on thinking more imaginatively about how to fund it, so as to avoid cutting most schools' budgets. I hope that is a debate we can open up, involving Labour voices, social liberals and indeed with progressive Conservatives too and others interested in educational inequality, wherever people are convinced by the government's idea that the premium could be an important way to close gaps in educational opportunity and attainment.

How not to restore trust

Danny Alexander, this weekend, found a misleading formula to tacitly acknowledge that spending per pupil will fall in real terms, while appearing to claim the opposite.

Pressed on whether the pupil premium means some schools would receive extra funding at the expense of others, Mr Alexander added: "It is included within the overall settlement, but the schools budget, the cash amount per pupil is going to stay the same going forward."

This 'protected in cash terms' formula to refer to cuts in real terms is designed to mislead the casual viewer or listener.

Using it does absolutely nothing for a government which has issues of public trust. Interviewers and reporters should consistently challenge it ("so that means a cut, after inflation, in real terms"), until using this formula becomes more trouble than it is worth.

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